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The Impact of Consolidation on Pharmaceutical R&D

Over the past 10 years or so there has been an enormous amount of consolidation in the life science industry. While this activity has been very good for shareholders, it has had a devastating effort on pharmaceutical R&D says John LaMattina PhD, a chemist, blogger,author and former President of Pfizer Global R&D.

“Mergers and acquisitions of pharmaceutical companies over the past 15 years have had a major consequence on the internal research and development productivity of these organizations. Industry consolidation has eliminated a high degree of competition and resulted in the downsizing of internal research efforts. The execution of these mergers has caused a loss of momentum in the development pipelines of these companies along with loss of scientific talent.”

In addition, he believes that M&A and outsourcing of R&D operations has resulted in the loss of scientific talent required for innovation and development of novel new medicines. “Sadly, this loss of innovation comes at a time when we are trying to find treatments for challenging and difficult-to-treat diseases like Alzheimers and many cancers” says LaMattina.

While most life sciences executives believe that consolidation is good for business, LaMattina, along with John Lechleiter, the outspoken CEO of Eli Lilly& Co (who is also a PhD-trained chemist) believe that continued consolidation in the industry will have devastating consequences. “We are still very much opposed to a large-scale combination. We don’t think size is necessarily supportive of innovation.” says Lechleiter.

LaMattina added “Downsizing R&D hinders the ability of companies to develop new drugs because they lack the scientific expertise required to make critical decision as a drug candidate makes it way through the pipeline.”

Unfortunately, most current pharmaceutical and life sciences executives don’t think like LaMattina. Since 2001, over 300,000 pharmaceutical employees, mostly R&D scientists and sales representatives have lost their jobs.